Relationship between outsourcing and operational efficiency of pension schemes of companies listed at the Nairobi stock exchange

Abstract

The study sets out on a survey to establish the relationship between outsourcing and operational efficiency in pension scheme administration. Numerous studies have been carried out on understanding the key factors driving outsourcing decisions but there is limited study on the impact of the outsourcing. Further, the retirement benefits authority (RBA) which among its mandate is to regulate and license pension scheme administrators does not have a policy guideline to guide Trustees on the outsourcing decision. Survey was conducted through a structured questionnaire. Drop and pick method was used. SPSS and Microsoft Excel were used for data analysis. The study established that majority of firms outsourced their staff pension scheme administration. Outsourcing enhanced operational efficiency. Most respondents perceive operational efficiency in the twin lens of quality of service to members and investment performance. It is recommended that RBA formulates a policy guide on the outsourcing decision and monitoring of the service provider.